WASHINGTON, Feb 12 (Reuters) - Donald Trump's trade advisers on Wednesday were working on plans for the reciprocal tariffs the U.S. president has vowed to impose on every country that charges duties on U.S. imports, ratcheting up fears of a widening global trade war and threatening to accelerate U.S. inflation further.
The timing of a new round of U.S. duties remained unclear. Progress on the reciprocal tariffs was being made amid talks with other nations that began "really early" on Wednesday morning, Trump's economic adviser Kevin Hassett told reporters at the White House.
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Asked if there would be an announcement from Trump today, Hassett added: "Well, you might see an announcement about progress or also guidelines of the things that he's thinking after having some, you know, exchanges of views with foreign people today and yesterday."
Trump said on Monday he would announce reciprocal tariffs over the following two days on all countries that impose duties on U.S. goods, and said he was also looking at separate tariffs on cars, semiconductors and pharmaceuticals.
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Separately, trade ministers of the 27-country European Union were due to meet by video conference to determine their response after European Commission President Ursula von der Leyen said tariff moves against the bloc "will not go unanswered".
Germany's economy ministry said ahead of the 1500 GMT meeting that the EU should focus on negotiating to avert a transatlantic trade war, while being ready with countermeasures.
Trump stunned markets on Monday by announcing tariffs on all steel and aluminum imports beginning on March 12. The plans drew condemnation from Mexico, Canada and the European Union, while Japan and Australia said they were seeking exemptions from the duties.
The news sent industries reliant on steel and aluminum imports scrambling to offset an expected jump in costs.
Last week, Trump imposed an additional 10% tariff on Chinese goods, effective February 4, with Chinese countermeasures taking effect this week.
He delayed a 25% tariff on goods from Mexico and Canada for a month until March 4 to allow negotiations over steps to secure U.S. borders and halt the flow of the drug fentanyl.
Some U.S. workers welcomed Monday's metal tariffs, but many manufacturing-heavy firms expressed deep concern over the next steps, warning the hike would reverberate across supply chains.
Executives from companies including supermarket chain Ahold Delhaize and Siemens Energy warned tariffs would lead to higher prices as they seek to pass on the extra costs of imports.
Europe's steelmakers are also worried that U.S. tariffs will lead to a flood of cheap steel coming into Europe. French steelmaker Aperam urged Brussels to intervene to curb imports if that happened, while Austria's specialty steelmaker voestalpine called on the EU to take immediate countermeasures.
Australia's industry minister, meanwhile, said the nation's plan to boost "green" aluminum exports would not be derailed by the threat of U.S. tariffs.
"The world has a high demand for our aluminum; we need it as part of the transition to net zero," Ed Husic told reporters at the National Press Club in Canberra. "The question is for our American friends do you really want to pay more for that product that you've got a big demand for?"
Economists broadly see tariffs as presenting more upside risk to inflation than not, and ahead of the announcement from the White House the scene around price pressures for American households has taken a turn for the worse.
Bureau of Labor Statistics data released Wednesday morning showed inflation picked up in January, notching its largest month-over-month gain since August 2023. The increases were broadbased across items of daily household consumption, covering everything from gasoline, up 1.8%; to shelter, up 0.4%; to eggs, up 15.2%, the largest increase in nearly a decade.
"It's unclear whether the January CPI will give some in the Trump administration pause about moving forward quickly with some of the proposed tariffs," Ryan Sweet, Chief US Economist at Oxford Economics, wrote after CPI's release. "Tariffs can still be used as a bargaining tool to get some concessions from other countries, but the political optics of putting even a little upward pressure on consumer prices via tariffs wouldn't be great for the Trump administration."
MONUMENTAL UNDERTAKING
In an interview on Wednesday with CNBC, Trump trade adviser Peter Navarro downplayed the negative impact of the expected tariffs, arguing that duties imposed during Trump's first term did not send inflation soaring and export-dependent producer economies often lowered their prices to prevent losing market share.
Trade experts say structuring the reciprocal tariffs that Trump wants poses big challenges for his team.
William Reinsch, senior fellow at the Center for Strategic and International Studies, said Trump officials could opt for a more easily implemented flat 10% or 20% tariff rate, or a messier approach that would require separate tariff schedules matching U.S. tariffs to each other country's rates.
Damon Pike, a trade specialist and principal with the U.S. division of accounting firm BDO International, said the reciprocal tariffs that Trump envisioned would be a monumental undertaking, given that each of the 186 members of the World Customs Organization had different duty rates.
"At the international level, there's something like 5,000 different descriptions at the 6-digit (product subheading) level, so 5,000 times 186 nations. It's almost an artificial intelligence project," he said.
Reinsch said imposing reciprocal tariffs also ceded control of the U.S. tariff schedule to other countries, following whichever tariff rate they set, and could lead to counterproductive results.
"For example, if Colombia has a high tariff on coffee in order to protect its industry, we would put a high tariff on Colombian coffee to match theirs, even though we don’t grow coffee. The only people hurt would be U.S. consumers," he said.
Reporting by Andrea Shalal and David Lawder in Washington; Additional reporting by Susan Heavey, Doina Chiacu and Katherine Jackson; Editing by Alex Richardson and Nick Zieminski
